Entrepreneurship Abilities of Amanzo Ortega and Anita Roddick - Essay Example

Entrepreneurs demonstrate certain typical characteristics and entrepreneurship is the act of creating value by recognizing and seizing an opportunity, and then utilizing human, social and financial resources (Lindsay, 2005). Entrepreneurs are prepared for challenges and adversities, and they have the propensity to take risks. They are strategic innovators and thrive on their instincts. Certain typical characteristics of entrepreneurs include the ability for opportunity recognition, visionary leadership, and strategic innovation. Through the entrepreneurial journey of Zara International Inc., and Body Shop, the entrepreneurship abilities of Amanzo Ortega and Anita Roddick respectively, would be compared. Zara, International Inc., is a chain of stores that belongs to the Spanish Fashion Group Inditex was founded by Amanzo Ortega, who had been brought up in humble surroundings. His first job has been as an errand boy for a La Coruna shirt maker in 1949 (Ghemawat & Nueno, 2003). During the course of his employment he discovered how costs piled up through the apparel chain. His first manufacturing unit was set up in 1963 to manufacture house coats but his quest to constantly innovate and improve led to the opening of the first store on an up market shopping street in La Coruna in 1975. While its first store opened in 1975, by the end of the 1970s, half-a-dozen Zara stores were opened in Galician cities and it reached the Spanish capital Madrid in 1985. After opening stores in all cities in Spain by the end of 1980s, Zara started opening stores outside Spain and making investments in IT and logistics. Zara represents the “fast fashion” segment where it has incorporated speed in all the four core processes – design, production, distribution and sales (Mullins & Komisar, 2010). The secret of success of Zara has been attributed to its policy of conducting the entire process without middlemen or agents. This has helped them buy raw material at good prices and use low-priced labour. They ensure small but consistent profit margins on every product they sell. They offer the latest designs in apparel and create scarcity of their products which encourages the shoppers to visit the store as soon as a new product is launched. They offer a wide product range for all segments. They also follow the sense and respond strategy where they are able to sense and interpret fashion trends and customer tastes. Another reason for their success lies in their strategy of constantly replenishing their stocks – about 40% is changed every week (Duncan, 2011). While other firms may manufacture just one stock for the entire season, Zara is always changing its products to suit consumer demands. Their unique strategy to fulfill and apprehend customer demands is evident from the way they filled their stores with dark, quiet shades appropriate to the tragedy of the Twin Towers in the United States in 9/11. While still having record sales during the tragedy, Zara’s brand image was also enhanced as they conveyed how they were involved in the sadness and suffering of so many. Zara has been responsible for bringing about a revolution in the apparel fashion industry Zara’s short cycle time reduced inventory, working capital requirement and facilitated continuous manufacture of new merchandise. Its stores have an attractive ambience and reflect the freshness of its offerings (Ghemawat & Nueno, 2003). In fact their stores function as the company’s face to the world. Thus, their store managers and associates were provided 15 days’ on-the-job training. Their business model was unique in several ways. For instance, it manufactured its most sensitive products internally. Zara tracked customer preferences through daily feedbacks from their store managers and accordingly placed orders with their internal and external suppliers. This sense and respond strategy has positioned them uniquely against their competitors. They eliminated the need for a warehouse by sending shipments directly to their stores twice a week. Zara was thus able to originate a design, and have the finished goods in stores in under five weeks in case of new products in contrast to the traditional six months taken by most apparel retailers. Body Shop, started in 1976 by Anita Roddick, is not a traditional beauty brand but a beauty brand with heart that goes beyond conventional corporate social responsibility (Values Report, 2011). They set their goals high as they know that even when they achieve their goals, it is not enough. This is an entrepreneurial quality where they have shared a shared commitment. They have been able to inspire many others to communicate more strongly on their values. It was the spirit of adventure of the entrepreneur Anita Roddick (nee Perella) that took her through the journey of the Body Shop. Being adventurous by nature, she travelled extensively with her husband through many third world cultures, and learnt of their forms of health and body care (Entrepreneur, 2008). This knowledge is what she applied when her husband left on a horse-back ride across the world. The project was born out of a need for sustenance for herself and her two children. She initially opened a small shop where she sold some of the back-to-nature cosmetic knowledge that she had gathered during her travels. Anita Roddick opened her first Body Shop by obtaining a loan of $6500 and by engaging an herbalist to create for her all-natural cosmetics. Body Shop started with just 25 products but 5 sizes of all the products. The first store was in Brighton, England and by the early 1990s, they had 700 store branches. The success of Body Shop gave her the ’91 World Vision Award for Development Initiative (Dassler, 2009). In 1993, Anita Roddick was knighted by the Queen of England giving her the name and title: Dame Anita Roddick. Roddick operated on a shoe-string budget without compromising on the aesthetics. Packaging was minimal and discounts offered to those who brought back the empty containers for refill. It was a combination of unique set of values, unique products, well-trained staff and good public relations that made the business grow so large that she soon had to open a second store (Entrepreneur, 2008). Within a year that store and its products had become so popular that Roddicks began selling franchises and within 5 years they were opening at the rate of two new stores per month. When the entrepreneur took the Body Shop public in 1984 the stock doubled with just one day of trading. She craved to create a line of cosmetics from natural ingredients and not rely on vanity to sell her products. The idea was to appeal to the customers’ concern for the environment. She adopted low-key marketing and through consumer education and social activism, she succeeded in her venture (Entrepreneur, 2008). Social activism was a key part of the success and Roddick also supported causes such as Greenpeace, Amnesty International, saving the forests and banning animal testing. Such initiatives served to generate free publicity while also enhancing the brand reputation and a loyal customer base. Customers wanted to be a part of such initiatives and this translated into sales. Saxton (2008) asserts that Body Shop is an exponent of Beliefs Marketing where the element of belief or the ideas and values form part of the offering. Along with selling their product, Body Shop also communicated their beliefs through their working practices. All the different processes such as production, the price paid to producers, the environmental impact of packaging and the banning of animal testing reflect a set of corporate beliefs and are elements of a corporate philosophy. The entrepreneur’s belief and concern for the environment formed the basis for the brand personality. Anita Roddick did not invest in advertising but her concern for the environment manifested in the plan for Body Shop (Argenti and Druckenmiller, 2004). The entrepreneur’s personality and values in life helped shape the personality of the company’s brand. The leader could succeed in creating a brand image without conventional advertising. The products had strong association with personal care and environmental concern as only natural ingredients were used and no animal testing was conducted. Their environmental concern also reflected in their packaging which was simple, refillable and recyclable. Another important factor that added to their brand image was their sourcing policy - they used local small producers from around the world. They even made it mandatory for their franchisees to run a local community program. Body Shop did not try to compete with the large established companies but created a new segment for natural beauty products in the competitive marketplace that competed on glamour (Kim & Mauborgne, 2005). Body Shop may have struggled in the later years but that does not undermine its unique strategy and business model. After creating the new market space, Body Shop focused on mining the new space but it was soon emulated by several companies that diluted the market share of Body Shop. Body Shop followed the Blue Ocean strategy which should be dynamic and not static. However, once competition set in and the ocean turned red, Body Shop should have strived to create another blue ocean and create a new market space but it failed to do so. A comparison of the two entrepreneurs reveals certain similarities and dissimilarities. Both Zara and Body Shop were born out of Opportunity recognition by the concerned entrepreneurs. Opportunity Recognition is an important aspect of entrepreneurship (Lindsay, 2005). Entrepreneurs are those individuals that find and exploit opportunities by knowing or recognizing things others do not. Concern for environment had arisen in the society and Anita Roddick was quick enough to climb on the rising wave just in time (Markides, 1997). This is opportunity recognition (OR) which helped Roddick to grow this need so as to exploit it. Body Shop strategically innovated by identifying new customer needs, which was the cornerstone of its success. Zara recognized the need for “medium quality fashion clothing at affordable prices” (Ghemawat & Nueno, 2003). Innovation is the focal point of entrepreneurship and an essential entrepreneurial characteristic (Koh, 1996). Both Zara and Body Shop entrepreneurs were innovative in their respective fields. Zara’s unique, inimitable business model has enabled the retailer to create sustainable competitive advantage and to register continued growth even in its challenging industry. Creating scarcity for their products urging customer to rush to the stores and using the sense and respond strategy are some of the unique features that provide Zara competitive advantage. By maintaining its stand against animal testing, Body Shop created a social innovation. Competitors were forced to emulate while it also influenced politics and judgment of what was socially acceptable (Leadbeater, 2007). Visionary Leadership is another entrepreneurial trait which means to have a passionate vision, and visionary leadership distinguishes the entrepreneurs from their competitors (McIntyre, 1998). Both Zara and Body Shop had visionary leaders that helped them achieve the market position in a short span of time. A strong vision creates a strong brand and helps the entrepreneur remained focused on its goal. Visionary leadership can guide an entrepreneur through adversity but this is where Body Shop failed in the later years. Over time, their attention was focused more on social causes than on product innovation which gave an opportunity to competitors such Bath & Body Works to eat up the customer base (Entrepreneur, 2008). Suddenly the customers attacked the company for “hypocritical practices” and Body Shop soon found that its customer base had diluted. Thus, while Zara is a purely commercial enterprise Body Shop can be termed a social enterprise that created an initial social innovation. Body Shop demonstrated through its own example that it was possible to make beauty products without testing it on animals. Both the entrepreneurs did not invest in conventional advertising and both demonstrate logical and analytical thinking process with focus on details. They also possess a distinctive decision style but the ones most responsive to change are the ones that survive in the competitive market place. Body Shop failed to sustain competition and invest in product innovation; Zara could constantly create a new market space, a new segment through ongoing product and process innovation. Total word Count: 1999 words Bibliography Argenti, PA. & Druckenmiller, B. (2004). Reputation and the Corporate Brand. Corporate Reputation Review, 6 (4), 368-374 Dassler, A. (2009). Anita Roddick. Available from http://www.topbusinessentrepreneurs.com/anita-roddick.html [Accessed December 5, 2014] Duncan, K. (2011). The Man From Zara: THE STORY OF THE GENIUS BEHIND THE INDITEX GROUP. Available from http://books.google.co.in/books?hl=en&lr=&id=dbkdAwAAQBAJ&oi=fnd&pg=PT7&dq=entrepreneurial+journey+of+ZARA+International&ots=8J7XHqQB-f&sig=HjDMEcT9T3RUWRqZxDnymLoGQyE#v=onepage&q&f=false [Accessed December 5, 2014] Entrepreneur. 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